The role of K-Rep bank group based loans on small micro enterprises in Nyeri County, Kenya
Njeru, Emma G M
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Lack of access to credit is almost universally indicated as a key problem for micro and small enterprises. The purpose of the study was to determine the contribution of K-Rep Bank group loans on growth of Small Micro Enterprises in Othaya and Mukurweini, Nyeri County. The objectives of the study included; the role of k-rep bank group based loans on growth of small micro enterprises, to establish how institutional capacity and organization policies adopted by Krep bank influence growth of small micro enterprise, to find out the effect of customer satisfaction in the bank services and products and lastly to assess the contribution of SMEs in enhancing growth in Othaya and Mukurweini. The research employed a descriptive survey design. The target population of the study was recipients of K-Rep bank group based loans for not less than 5 years operating their business in Othaya and Mukurweini. Using a simple random sampling technique, the researcher arrived at a sample size of 80 individuals. During the month of July, 2012, data was collected using a pretested questionnaire. Additional data was collected using an interviewed schedule administered to credit officers at K-Rep bank Nyeri. The researcher found out the following; All the respondents had received a loan from the bank with the majority (67%) of the respondents able to access between quarter a million to half a million Kenya shillings. 46% wished to finance business development while 37% aimed to buy inventories for their business. SMEs had employed 1 to 5 employees while 14% of the SMEs in the study had 5-10 individuals as employees. The researcher established that K-rep bank's group based loans had contributed to many SMEs in Othaya and Mukurweini. However, the findings have revealed that the contribution was insufficient and the loanees had to look for additional credit from other financial institutions, the researcher concludes that K-rep bank has adequate institutional capacity and organizational policies. This was exhibited by the financial training given to the clients and the high level of awareness that was found on the ground, finally, the study established that SMEs have contributed to growth in Othaya and Mukurweini. This was evident by the number of enterprises set up and the number of employees earning their living from the establishments. SMEs had employed 1 to 5 employees while 14% of the SMEs in the study had 5-10 individuals as employees. The study recommended that K-rep bank should reevaluate their lending policy to conform to the current demands of business which is faced by a high cost of living and inflation, K-rep bank should strengthen its institutional capacity to set up a training college where its members can gain management skills required to run an SME successfully and finally K-rep bank should look to innovate new products and services to meet the changing needs of customers adequately to enhance customer satisfaction.
University of Nairobi, Kenya